Can international hotel operators push for the English version of a hotel management agreement (HMA) executed in France to be legally enforced? The legal and operational aspects of the contract version are non-negligible, and the interests of each party divergent – the choice between the English or French version of the HMA must therefore be properly considered. This is a delicate point that needs to be rationally addressed when considering entering into a partnership.

In theory, as the HMA is executed in France, the parties should have no difficulty in agreeing that French law will prevail. All that remains, then, is to decide on the English or French version of the HMA’s wording.

French owners should expect to receive from international operators an HMA template of some 40 or so pages in technical/ legal English that is more or less easy to understand. While some agreements in English are quite simple to interpret, needing no translation into French, this is not the norm, and increasingly commonplace DeepL/ Google automatic translation fails to render these translated agreements comprehensible and usable.

International operators often defend their HMA template and appendices, and the security they provide, arguing that they are an integral part of the hotel group’s assets – a fair point. However, there is no legal requirement for the English version to prevail when signing an HMA for a hotel operated in France.

What are the real issues for French owners? In practice, owners face a twofold challenge: i) they may be new to the hotel industry, and ii) professional international operators often impose their familiar HMA templates in a foreign language, securing them various inherent advantages.

For French owners and their teams, the French version is much easier to understand for the execution of a long-term contact, especially in the event of interpretation difficulties and disputes over technical or complex issues, of course. In some cases, international operators (in return for having the English version accepted 😊) may agree to each page of the HMA being split into two columns, with the English text being translated into French. However, this format is cumbersome, and the contract and its appendices could well run into dozens of pages.

What is the most important for French owners? Just being able to understand the contract in French or legally enforcing the French version at all costs? Including a translation of the text on each page often seems a good compromise for the parties. Owners thus need to weigh up how easy the contract is to read versus being bound by a legally enforceable French version.

The significance of the project’s financial context for French owners – when owners involve French banks and other French financial partners, the HMA plays a key role. Here, the French version and French law will necessarily prevail. This is the case, for example when French banks or other French financial or institutional equity partners finance the construction or renovation of a hotel under an HMA, or when a property lease is signed. There is also the case of hotel investments in French overseas departments and territories where a combination of bank financing and financing subject to the Girardin law is used.

Taking into account certain specific and complex clauses in the HMA

i) it may be necessary to draft certain HMA clauses in French, such as the “peaceful enjoyment” clause, also known in English as “non-disturbance”.

This clause prevents termination of the HMA if the owner defaults on its loan, thereby protecting the operator’s rights under the agreement. It is in the operator’s interest that this clause be drafted in French and subject to French law so as to hold the owner accountable vis-à-vis its bank, and to ensure the clause’s legal validity. Non-disturbance has a direct impact on the owner’s financing arrangements (higher rate, shorter term, etc.) and is the subject of tough negotiations between the owner, the operator and the banks concerned

(ii) when the owner is not the employer of the staff working in the hotel, the “reverse management contract” clause on employee management is one of those tailor-made clauses that are tricky to both draft and execute when considering French employment regulations. The parties are exposed to risks such as co-employment, unlawful lending of labour and abusive subcontracting. In theory, the French version and recourse to French law limit any interpretation and liability issues. This is the case, for example, if a) the agreement includes an appendix on the delegation of power, regarding civil and criminal matters, between the operator and the hotel’s general manager, who is employed by the operator, and b) the operator has requested from the owner, a first demand guarantee to cover it for hotel staff labour commitments.

If the parties opt for the English version, the operator will naturally push for the agreement’s negotiations and all related discussions to take place in English– if the international operator insists, the contract’s negotiations will be conducted in English, with the final version of the HMA being drawn up in English – the parties will be bound by this version.

However, there are instances when owners are able to impose the French version and French law on the HMA – the following is an example of a typical clause in an HMA subject to French law (and thus to French common law jurisdiction) and where the French version prevails:

This Agreement is governed by French law.

Any dispute relating to this Agreement which the Parties are unable to resolve amicably shall be referred to the Judicial Court of ________, which is expressly and exclusively competent to hear the matter.

This Agreement is drafted in French. Should it be translated or executed in a language other than French, the French version only shall prevail[1].

We will be happy to provide more information on disputes giving priority to the English language, and arbitration procedures.

Ramifications of opting for the HMA English version: the competent jurisdiction.
Opting for the English version has direct consequences on the jurisdiction that will seized in the event of dispute (independently of the contractual clause to be included in the HMA appointing an expert designated by the parties to settle minor disputes).

If the English HMA version prevails, disputes relating to a contract executed in France can only be referred to a court such as Paris. Indeed, a court governed by ordinary French law (generally the Commercial Court) does not have jurisdiction to rule on a dispute concerning a contract drafted in a foreign language[i].

In light of the points raised in this article, our recommendation would be to respect a legally coherent contractual whole and agree on the language that will prevail.
Indeed, the letter of intent, or Term Sheet together with the HMA and its appendices that sometimes include the Technical Services Agreement, form an indivisible and inseparable contractual whole. This is why, from the negotiations kick-off, the parties must specify and bear in mind that the agreements are subject to French law, to a specific jurisdiction and to either the prevailing English or French version of the HMA.

One last practical aspect to finish: as it is usually the hotel operator who provides the HMA template in English, before signing, French owners should negotiate that the cost of translating the letter of interest, the HMA and its appendices be borne by the operator. And before concluding the agreement, French owners should be exacting with regard to translation quality (that said, the extra cost of certified translation is not necessarily worthwhile).

1. We will be happy to provide more information on clauses ruling disputes and giving priority to the English language, and arbitration procedures.

[i] Experience of disputes involving in France hotel management agreements seems to show that the commercial ordinary courts in France are far from familiar with the hotel sector. This can lead to a form of legal uncertainty surrounding the expected legal effectiveness and performance of hotel management agreements in the event of dispute. The duration of proceedings has to be taken into account also. This is why, in our experience, we recommend using arbitration, and instructing an independent, impartial expert for minor disputes. Appointing an expert enables the parties to quickly reconcile and adjust their respective position with regard hotel management agreements that inherently imply a long life together.

Published in Hospitalitynet